Victory Capital Holdings, Inc. (Form: 8-K, Received: 05/08/2018 07:07:48)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): May 3, 2018

Victory Capital Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-38388	32-0402956
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification Number)

4900 Tiedeman Road, 4 th Floor; Brooklyn, OH		44144
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (216) 898-2400

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions ( see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 1.01 Entry into a Material Definitive Agreement.

On May 3, 2018, Victory Capital Holdings, Inc. (the “Company”) in its capacity as the borrower entered into Amendment No. 1 to Credit Agreement (“Amendment No. 1”) with, inter alios , the other loan parties party thereto, the lenders party thereto and Royal Bank of Canada, in its capacities as administrative agent and collateral agent for the secured parties (in such capacities, the “Administrative Agent”), which amends the Credit Agreement, dated as of February 12, 2018 (the “Credit Agreement”), among the Company, the lenders from time to time party thereto and the Administrative Agent. Pursuant to Amendment No. 1, the Company has increased the aggregate principal amount of revolving credit commitments under the Credit Agreement from $50,000,000 to $100,000,000. All other terms of the Credit Agreement remain unchanged.

The foregoing description of Amendment No. 1 does not purport to be complete and is subject to, and qualified in its entirety by, the full text of Amendment No. 1, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.

Item 2.02. Results of Operations and Financial Condition

On May 8, 2018, the Company issued a press release reporting results for the three months ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

The information contained herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing of the Company under the Exchange Act or the Securities Act of 1933, as amended.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure required by this item is included in Item 1.01 above and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

Exhibits. The following exhibits are filed herewith:

Exhibit
Number		Description
10.1		Amendment No. 1 to Credit Agreement, dated as of May 3, 2018 among, inter alios , the Company, the other loan parties party thereto, the lenders party thereto and Royal Bank of Canada, in its capacities as administrative agent and collateral agent for the secured parties (in such capacities, the “Administrative Agent”), which amends the Credit Agreement, dated as of February 12, 2018 among the Company, the lenders from time to time party thereto and the Administrative Agent.

99.1		Press release dated May 8, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

VICTORY CAPITAL HOLDINGS, INC.

Dated: May 8, 2018	By:	/s/ Terence F. Sullivan
		Name:	Terence F. Sullivan
		Title:	Chief Financial Officer and Head of Strategy

Exhibit 10.1

EXECUTION VERSION

AMENDMENT NO. 1 TO CREDIT AGREEMENT , dated as of May 3, 2018 (this “ Amendment ”), is made and entered into by and among Victory Capital Holdings, Inc., a Delaware corporation (the “ Borrower ”), the other Loan Parties party hereto, each lender listed on Schedule I hereto (each, an “ Incremental Revolving Facility Lender ” and, collectively, the “ Incremental Revolving Facility Lenders ”), Royal Bank of Canada (“ Royal Bank ”), in its capacities as administrative agent and collateral agent for the Secured Parties (in its capacities as administrative agent and collateral agent, together with its successors in such capacities, the “ Administrative Agent ”), and Royal Bank, as Issuing Bank.

RECITALS:

WHEREAS, reference is made to the Credit Agreement dated as of February 12, 2018 (as amended, supplemented or otherwise modified to the date hereof, the “ Credit Agreement ”), by and among the Borrower, the lenders from time to time party thereto and the Administrative Agent;

WHEREAS, it is intended that (a) the Borrower will obtain the Incremental Revolving Credit Commitments (as defined below) in the form of 2018 Incremental Revolving Credit Commitments and (b) the proceeds of the borrowings under the Incremental Revolving Credit Commitments will be used in accordance with Section 5.10 of the Credit Agreement (the transactions described in this paragraph, collectively, the “ Transactions ”);

WHEREAS, subject to the terms and conditions of the Credit Agreement, and pursuant to Section 2.22(a) of the Credit Agreement, the Borrower has requested that (a) the Incremental Revolving Facility Lenders provide Incremental Revolving Commitments in an aggregate principal amount of $50,000,000 and (b) the Credit Agreement be amended in the manner provided for herein;

WHEREAS, the Borrower intends to incur the Incremental Revolving Credit Commitments under the Borrower’s available capacity under the Growth Available Incremental Amount; and

WHEREAS, the Incremental Revolving Facility Lenders are willing to provide the Incremental Revolving Credit Commitments to the Borrower on the Amendment No. 1 Effective Date (as defined below), and the parties hereto wish to amend the Credit Agreement on the terms and subject to the conditions set forth herein and in the Credit Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Defined Terms; Interpretation; Etc . Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. This Amendment constitutes an “Incremental Facility Amendment” and a “Loan Document”, each as defined in the Credit Agreement.

SECTION 2. Incremental Loans . (a) Each Incremental Revolving Facility Lender hereby agrees, severally and not jointly, to provide an Incremental Revolving Credit Commitment to the Borrower on the Amendment No. 1 Effective Date in Dollars in an aggregate principal amount equal to the amount set forth opposite such Incremental Revolving Facility Lender’s name on Schedule I attached hereto (each, an “ Incremental Revolving Credit Commitment ” and, collectively, the “ Incremental Revolving Credit Commitments ”), on the terms set forth herein and in the Credit Agreement (as amended hereby), and subject to the conditions set forth herein. The Incremental Revolving Credit Commitments

shall be deemed to be “Revolving Credit Commitments” as defined in the Credit Agreement (as amended hereby) for all purposes of the Loan Documents having terms and provisions identical to those applicable to the Revolving Credit Commitments outstanding immediately prior to the Amendment No. 1 Effective Date (the “ Existing Revolving Credit Commitments ”).

(b) Each Incremental Revolving Facility Lender (i) confirms that a copy of the Credit Agreement and the other applicable Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment and make an Incremental Revolving Credit Commitment, have been made available to such Incremental Revolving Facility Lender; (ii) agrees that it will, independently and without reliance upon RBC Capital Markets (“ RBCCM ”) and BMO Capital Markets Corp. (together with RBCCM, the “ Incremental Amendment Arrangers ”), each in its capacity as the joint lead arranger and joint bookrunner with respect to this Amendment, the Administrative Agent, or any other Lender or agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or the other applicable Loan Documents, including this Amendment; (iii) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent and the Collateral Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) acknowledges and agrees that upon the Amendment No. 1 Effective Date, (1) such Incremental Revolving Facility Lender shall be a “Lender”, “Additional Revolving Lender” and a “Revolving Lender” under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender and an Incremental Revolving Facility Lender thereunder, (2) each of the Incremental Revolving Credit Commitments of each Incremental Revolving Facility Lender shall be an “Additional Revolving Credit Commitment” and a “Revolving Credit Commitment” for all purposes under the Credit Agreement and the other Loan Documents and (3) the Incremental Revolving Loans of each Incremental Revolving Facility Lender shall each be an “Additional Revolving Loan” and a “Revolving Loan” (and have the same terms for all purposes under the Credit Agreement and the other Loan Documents).

SECTION 3. Amendments to Credit Agreement.

(a) Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions in proper alphabetical sequence:

“ 2018 Incremental Revolving Credit Commitment ” means the Incremental Revolving Credit Commitment made on the Amendment No. 1 Effective Date pursuant to Amendment No. 1.

“ Amendment No. 1 ” means, that certain Amendment No. 1 to Credit Agreement dated as of May 3, 2018 among the Borrower, the Administrative Agent and the Lenders party thereto.

“ Amendment No. 1 Effective Date ” means, the date on which the conditions precedent set forth in Section 4 of Amendment No. 1 were satisfied or waived in accordance therewith.

(b) The defined term “Class” in Section 1.01 of the Credit Agreement is hereby amended to add the following sentence after the last sentence thereof:

“For the avoidance of doubt, any Loans incurred under the 2018 Incremental Revolving Credit Commitments shall constitute the same Class with the “Revolving Loans”, the 2018 Incremental Revolving Credit Commitments incurred under Amendment No. 1 shall constitute the same Class with the “Revolving Commitments” and the Additional Lenders providing 2018 Incremental Revolving Credit Commitments incurred under Amendment No. 1 shall constitute the same Class with the “Revolving Lenders”.”

SECTION 4. Conditions Precedent to Incremental Loans . This Amendment, and each Incremental Revolving Facility Lender’s obligation to provide the Incremental Revolving Credit Commitments pursuant to this Amendment, shall become effective as of the date on which the following conditions precedent are satisfied (such date, the “ Amendment No. 1 Effective Date ”):

(a) The Administrative Agent shall have received from the Borrower, each other Loan Party and each Incremental Revolving Facility Lender either (i) a counterpart of this Amendment duly executed and delivered on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile or other electronic transmission of a signed counterpart of this Amendment) that such party has duly executed and delivered a counterpart of this Amendment.

(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders (including, without limitation, the Incremental Revolving Facility Lenders) and dated the Amendment No. 1 Effective Date) of Willkie Farr & Gallagher LLP, in its capacity as special counsel for the Loan Parties, in form and substance reasonably satisfactory to the Administrative Agent.

(c) The Administrative Agent shall have received (i) a certificate of each Loan Party, dated as of the Amendment No. 1 Effective Date and executed by a secretary, assistant secretary or other Responsible Officer thereof, which shall (A) certify that (x) attached thereto is a true and complete copy of the certificate or articles of incorporation, formation or organization or other comparable organizational document, as applicable, of such Loan Party certified by the relevant authority of its jurisdiction of organization, (y) the certificate or articles of incorporation, formation or organization or other comparable organizational document, as applicable, of such Loan Party attached thereto have not been amended (except as attached thereto) since the date reflected thereon and (z) attached thereto is a true and correct copy of the by-laws or operating, management, partnership or similar agreement of such Loan Party, together with all amendments thereto as of the Amendment No. 1 Effective Date, (B) certify that attached thereto is a true and complete copy of resolutions or written consents of its shareholders of Board of Directors, as the case may be, authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and that such resolutions or written consents have not been modified, rescinded or amended and are in full force and effect without amendment, modification or rescission, and (C) identify by name and title and bear the signatures of the officers, managers, directors or authorized signatories of such Loan Party who have executed the Loan Documents to which such Loan Party is a party on the Amendment No. 1 Effective Date and (ii) a good standing (or equivalent) certificate as of a recent date for such Loan Party from the relevant authority of its jurisdiction of organization (to the extent such concepts are applicable).

(d) The Administrative Agent shall have received for each Incremental Revolving Facility Lender that shall have requested a Promissory Note, a duly completed and executed Promissory Note for such Incremental Revolving Facility Lender.

(e) The Administrative Agent shall have (i) received for the account of each Incremental Revolving Facility Lender an upfront fee equal to 0.50% of the aggregate principal amount of such Incremental Revolving Facility Lender’s Incremental Revolving Credit Commitments provided on the Amendment No. 1 Effective Date, such fee to be earned and payable on, and subject to the occurrence of, the Amendment No. 1 Effective Date and (ii) received all fees and other amounts (which may, at the Administrative Agent’s option in consultation with the Borrower, be offset against the Revolving Loans made utilizing the Incremental Revolving Credit Commitments on the Amendment No. 1 Effective Date) due and payable on or prior to the Amendment No. 1 Effective Date, including, to the extent invoiced at least two Business Days prior to the Amendment No. 1 Effective Date, reimbursement or payment of all out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel) required to be reimbursed or paid by any Loan Party.

(f) The Administrative Agent shall have received a certificate from the chief financial officer of the Borrower certifying as to the solvency of the Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions, substantially in the form of Exhibit M to the Credit Agreement.

(g) The Administrative Agent, the Incremental Amendment Arrangers and Incremental Revolving Facility Lenders shall have received, at least three Business Days prior to the Amendment No. 1 Effective Date, all documentation and other information about the Borrower and the other Loan Parties as shall have been reasonably requested in writing at least ten Business Days prior to the Amendment No. 1 Effective Date by the Administrative Agent, the Incremental Amendment Arrangers or such Incremental Revolving Facility Lender that they shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act.

(h) Upon the effectiveness of this Amendment and both immediately before and immediately after giving effect to this Amendment, no Event of Default shall exist.

(i) The representations and warranties in Section 5 of this Amendment shall be true and correct in all material respects; provided that to the extent such representations and warranties are qualified by “material”, “material adverse effect” or a similar term, they shall be true and correct in all respects.

(j) The Administrative Agent shall have received a certificate from a Responsible Officer of the Borrower certifying (x) that the Incremental Revolving Credit Commitments are permitted to be incurred under the Borrower’s available capacity under the Growth Available Incremental Amount and (y) to the matters set forth in the foregoing clauses (h) and (i).

The Administrative Agent shall notify the Borrower and the Lenders of the Amendment No. 1 Effective Date, and such notice shall be conclusive and binding.

SECTION 5. Representations and Warranties . In order to induce the Incremental Revolving Facility Lenders and the Administrative Agent to enter into this Amendment and to induce the Incremental Revolving Facility Lenders to provide the Incremental Revolving Credit Commitments hereunder, the Borrower hereby represents and warrants to the Incremental Revolving Facility Lenders and the Administrative Agent on and as of the Amendment No. 1 Effective Date that:

(a) Organization; Powers . The Borrower and each Restricted Subsidiary (a) is (i) duly organized and validly existing and (ii) in good standing (to the extent such concept exists in the relevant jurisdiction) under the Requirements of Law of its jurisdiction of organization and (b) has all requisite organizational power and authority to own its assets and to carry on its business as now conducted; except, in each case referred to in this Section 5(a) (other than clauses (a)(i) and (b) with respect to any Loan Party) where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

(b) Authorization; Enforceability . The execution, delivery and performance by each Loan Party of this Amendment are within such Loan Party’s corporate or other organizational power and have been duly authorized by all necessary corporate or other organizational action of such Loan Party. This Amendment has been duly executed and delivered by such Loan Party and is a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to the Legal Reservations.

(c) Governmental Authorization; No Conflicts . The execution and delivery of this Amendment by each Loan Party and the performance by such Loan Party thereof (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect and (ii) such consents, approvals, registrations, filings or other actions the failure to obtain or make which could not be reasonably expected to have a Material Adverse Effect, (b) will not violate any (i) of such Loan Party’s Organizational Documents or (ii) Requirement of Law applicable to such Loan Party which violation, in the case of this clause (b)(ii) , would reasonably be expected to have a Material Adverse Effect and (c) will not violate or result in a default under any material Contractual Obligation to which such Loan Party is a party or is otherwise bound which violation, in the case of this clause (c) , would reasonably be expected to result in a Material Adverse Effect.

(d) Incorporation of Representations and Warranties . The representations and warranties of the Borrower and each other Loan Party set forth in the Credit Agreement and in any other Loan Document are true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) on and as of the Amendment No. 1 Effective Date (or, in the case of any such representation or warranty expressly stated to have been made as of a specific date, as of such specific date).

SECTION 6. Reaffirmation of Guarantees and Security Interests . Each Loan Party hereby acknowledges its receipt of a copy of this Amendment and its review of the terms and conditions hereof and consents to the terms and conditions of this Amendment and the transactions contemplated thereby, including the extension of credit in the form of the Incremental Revolving Credit Commitments. Each Loan Party hereby (a) affirms and confirms its guarantees, pledges, grants and other undertakings under the Credit Agreement and the other Loan Documents to which it is a party, (b) agrees that (i) each Loan Document to which it is a party shall continue to be in full force and effect and (ii) all guarantees, pledges, grants and other undertakings thereunder shall continue to be in full force and effect and shall accrue to the benefit of the Secured Parties, including the Incremental Revolving Facility Lenders, and (c) acknowledges that from and after the date hereof, all Incremental Revolving Credit Commitments and Revolving Loans thereunder from time to time outstanding shall be deemed to be Secured Obligations.

SECTION 7. Expenses; Indemnity; Damage Waiver . Section 9.03 of the Credit Agreement is hereby incorporated by reference, mutatis mutandis , as if such Section were set forth in full herein. The terms and conditions of Section 9.03 of the Credit Agreement shall apply, mutatis mutandis , to each of the Incremental Amendment Arrangers, each in its capacity as such, as if each reference to the

Administrative Agent under the Credit Agreement were a reference to the Incremental Amendment Arrangers hereunder.

SECTION 8. Miscellaneous .

(a) Non-U.S. Lenders . Each Incremental Revolving Facility Lender shall have delivered to the Administrative Agent and the Borrower such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such Incremental Revolving Facility Lender may be required to deliver to the Administrative Agent and the Borrower pursuant to Section 2.17(f) of the Credit Agreement.

(b) Recordation of the Incremental Revolving Credit Commitments . Upon execution and delivery hereof, the Administrative Agent will record in the Register the Incremental Revolving Credit Commitments made by the Incremental Revolving Facility Lenders.

(c) Amendment, Modification and Waiver . This Amendment may not be amended and no provision hereof may be waived except as permitted by Section 9.02 of the Credit Agreement.

(d) Entire Agreement . This Amendment, the Credit Agreement (as amended hereby) and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof.

(e) Governing Law . THIS AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT, WHETHER IN TORT, CONTRACT (AT LAW OR IN EQUITY) OR OTHERWISE, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(f) Jurisdiction; Waiver of Venue. The jurisdiction and waiver of right to trial by jury provisions in clauses (b) and (c) of Sections 9.10 of the Credit Agreement are incorporated herein by reference mutatis mutandis .

(g) Service of Process . Each party hereto irrevocably consents to service of process in the manner provided for notices in clause (d) of Section 9.10 of the Credit Agreement. Nothing in this Amendment or any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.

(h) WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE REQUIREMENTS OF LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO

ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

(i) Severability . To the extent permitted by applicable Requirements of Law, any provision of this Amendment or any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

(j) Counterparts; Integration; Effectiveness . This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Amendment constitute the entire agreement among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4 hereof, his Amendment shall become effective when it has been executed by the Borrower and the Administrative Agent and when the Administrative Agent has received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by email as a “.pdf” or “.tif” attachment shall be effective as delivery of a manually executed counterpart of this Amendment.

(k) Headings . Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

(l) Reference to and Effect on the Credit Agreement and the Other Loan Documents . On and after the Amendment No. 1 Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this Amendment. Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed and this Amendment shall not be considered a novation. The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or Lender under, the Credit Agreement or any of the other Loan Documents. This Amendment shall be deemed to be a Loan Document as defined in the Credit Agreement.

[ Remainder of this page intentionally left blank ]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.


	VICTORY CAPITAL HOLDINGS, INC. , as Borrower


	By:	/s/ Terence F. Sullivan
		Name: Terence F. Sullivan
		Title: Chief Financial Officer and Head of Strategy


	VCH HOLDINGS, LLC , as a Loan Party


	By:	/s/ Terence F. Sullivan
		Name: Terence F. Sullivan
		Title: Chief Financial Officer and Treasurer


	VICTORY CAPITAL OPERATING, LLC , as a Loan Party


	By:	/s/ Terence F. Sullivan
		Name: Terence F. Sullivan
		Title: Chief Financial Officer and Treasurer


	VICTORY CAPITAL MANAGEMENT INC. , as a Loan Party


	By:	/s/ Terence F. Sullivan
		Name: Terence F. Sullivan
		Title: Chief Financial Officer and Treasurer

[Signature Page to Amendment No. 1 to Credit Agreement]

	ROYAL BANK OF CANADA, as Administrative Agent


	By:	/s/ Susan Khokher
		Name: Susan Khokher
		Title: Manager, Agency

[Signature Page to Amendment No. 1 to Credit Agreement]

	ROYAL BANK OF CANADA, as an Incremental Revolving Facility Lender


	By:	/s/ Tim Stephens
		Name: Tim Stephens
		Title: Authorized Signatory

[Signature Page to Amendment No. 1 to Credit Agreement]

	BANK OF MONTREAL, as an Incremental Revolving Facility Lender


	By:	/s/ Joan Murphy
		Name: Joan Murphy
		Title: Managing Director

[Signature Page to Amendment No. 1 to Credit Agreement]

	KEYBANK NATIONAL ASSOCIATION, as an Incremental Revolving Facility Lender


	By:	/s/ Shane M. Leary
		Name: Shane M. Leary
		Title: Vice President

[Signature Page to Amendment No. 1 to Credit Agreement]

Schedule I

As of the Amendment No. 1 Effective Date:

Incremental Revolving Facility Lender	Incremental Revolving Credit Commitment
Royal Bank of Canada	$	15,000,000
Bank of Montreal	$	25,000,000
KeyBank National Association	$	10,000,000
Total:	$	50,000,000

Exhibit 99.1

News Release

VICTORY CAPITAL REPORTS FIRST QUARTER 2018 RESULTS

First Quarter 2018 Highlights(1)

· Assets under management (“AUM”) of $60.9 billion as of March 31, 2018, an 8% increase from March 31, 2017

· Strong investment performance, with 87% of AUM outperforming its respective benchmarks over the trailing one-year period, 71% over the three-year period, 83% over the five-year period, and 79% over the ten-year period ended March 31, 2018

· Net outflows of $633 million

· $105 million in revenue, a 4% increase from the first quarter of 2017

· GAAP earnings of $0.16 per diluted share, a 100% increase over the GAAP earnings per diluted share for the first quarter of 2017

· Adjusted Net Income with tax benefit per diluted share of $0.40, a 33% increase over the Adjusted Net Income with tax benefit per diluted share for the first quarter of 2017

· Operating margin of 26.0%, up from 19.4% in the first quarter of 2017

· Adjusted EBITDA margin of 37.9%, up from 33.4% in the first quarter of 2017

Cleveland, Ohio, May 8, 2018 — Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital” or the “Company”) today reported its results for the first quarter ended March 31, 2018.

“In a quarter that marked a return to volatility for the equity markets, I am pleased to report that Victory Capital delivered very solid results, said David Brown, Chairman and Chief Executive Officer. Our Investment Franchises and Solutions Platform continued to deliver compelling long-term investment performance, gross flows for the quarter remained robust at $3.7 billion, and operating margins were strong.

“We continue to achieve strong momentum in our Solutions Platform, including our VictoryShares ETFs. AUM in our ETFs grew to $2.7 billion, an increase of nearly 19% quarter over quarter, and we expect client demand for rules-based strategic beta strategies to continue to grow throughout 2018.

“Total AUM was $60.9 billion as of March 31, 2018, an 8% increase from March 31, 2017. AUM declined from $61.8 billion at December 31, 2017, due to market depreciation and net outflows of $633 million for the quarter. Given the elevated level of client rebalancing activity we experienced and the lumpiness of our business quarter to quarter with respect to flows, the outflows were not outside our expectations. These results follow a net-flow-positive Q4 2017, highlighting the importance of looking at flows on an annual basis versus quarter to quarter.

“Looking ahead, we remain committed to creating long-term value for our shareholders through the disciplined execution of our corporate vision, which combines strategic acquisitions with organic growth. We believe our next generation, integrated multi-boutique business model is attractive to investment firms looking for a strategic partner, and we have an active pipeline of potential M&A opportunities. Additionally, we continue to focus on growing organically by leveraging the capabilities of our Franchises and Solutions Platform. Our “won-but-not-funded” pipeline is healthy as are our overall sales prospects. As in the past, serving the needs of our clients remains our top priority.”

(1) Adjusted measures are non-GAAP financial measures. An explanation of these non-GAAP financial measures is included under the heading “Information Regarding Non-GAAP Financial Measures” at the end of this press release. Please see the non-GAAP reconciliation tables.

The table below presents AUM, and certain GAAP and non-GAAP (“adjusted”) financial results.

(in millions except per share amounts or as otherwise noted)

	For the Three Months Ended
	March 31,			December 31,			March 31,
	2018			2017			2017
Assets Under Management
Ending	$	60,855		$	61,771		$	56,622
Average	62,020			60,354			56,277

Flows
Gross	$	3,685		$	4,371		$	4,725
Net	(633		)	294			(386		)
Net flows excluding Diversified Equity(1)	(633		)	294			(54		)

Consolidated Financial Results (GAAP)
Revenue	$	105.0		$	105.6		$	100.7
Operating expenses	77.7			78.7			81.1
Income from operations	27.3			26.9			19.6
Operating margin	26.0		%	25.5		%	19.4		%
Net income	10.5			11.2			4.4
Earnings per diluted share	$	0.16		$	0.19		$	0.08

Adjusted Performance Results (Non-GAAP)(2)
Adjusted EBITDA	$	39.8		$	40.0		$	33.6
Adjusted EBITDA margin	37.9		%	37.9		%	33.4		%
Adjusted net income	23.1			18.1			13.0
Tax benefit of goodwill and acquired intangibles	3.3			5.0			4.9
Adjusted net income with tax benefit	26.4			23.1			17.9
Adjusted net income with tax benefit per diluted share	$	0.40		$	0.39		$	0.30

(1) In May 2017, the Company made a decision to exit the Diversified Equity Franchise; all remaining AUM was transferred to the Munder Capital Management Franchise to manage beginning May 15, 2017.

(2) Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. Reconciliation of each of Adjusted EBITDA and Adjusted Net Income to net income have been provided in the non-GAAP reconciliation tables in this press release. An explanation of these non-GAAP financial measures is included below under the heading “Information Regarding Non-GAAP Financial Measures”.

AUM, Flows and Investment Performance

Victory Capital’s AUM declined by $0.9 billion to $60.9 billion at March 31, 2018, compared to $61.8 billion at December 31, 2017. The decrease was due to market depreciation of $0.3 billion and net outflows of $0.6 billion. Gross flows for the first quarter were $3.7 billion.

As of March 31, 2018, Victory Capital offered 72 investment strategies through its nine autonomous Investment Franchises and Solutions Platform. The table below presents outperformance against benchmarks by AUM and strategies as of March 31, 2018.

	Trailing		Trailing		Trailing		Trailing
	1-Year		3-Years		5-Years		10-Years
Percentage of AUM Outperforming Benchmark	87	%	71	%	83	%	79	%
Percentage of Strategies Outperforming Benchmark	75	%	70	%	76	%	72	%

First Quarter of 2018 Compared to Fourth Quarter of 2017

For the quarter ended March 31, 2018, GAAP net income declined 6% to $10.5 million, or $0.16 per diluted share, compared to GAAP net income of $11.2 million, or $0.19 per diluted share, for the fourth quarter of 2017. GAAP operating margin was 26.0% for the quarter compared to 25.5% for the fourth quarter of 2017. Adjusted Net Income with tax benefit increased 14% to $26.4 million, or $0.40 per diluted share comprised of $0.35 per diluted share in Adjusted Net Income and $0.05 per diluted share in tax benefit, compared to $23.1 million, or $0.39 per diluted share comprised of $0.30 per diluted share in Adjusted Net Income and $0.09 per diluted share in tax benefit, for the fourth quarter of 2017.

Adjusted EBITDA and Adjusted EBITDA margin were $39.8 million and 37.9%, respectively, for the first quarter of 2018, essentially flat compared to the fourth quarter of 2017.

· Revenue was $105.0 million, a slight decline from $105.6 million for the fourth quarter of 2017.

· Operating expenses declined to $77.7 million, compared to $78.7 million in the fourth quarter of 2017 due to operating efficiencies, partially offset by costs associated with the debt refinancing.

First Quarter of 2018 Compared to First Quarter of 2017

For the quarter ended March 31, 2018, GAAP net income was $10.5 million, or $0.16 per diluted share, compared to $4.4 million, or $0.08 per diluted share, in the first quarter of 2017. GAAP operating margin increased to 26.0% for the quarter from 19.4% for the first quarter of 2017. Adjusted Net Income with tax benefit increased 47% to $26.4 million, or $0.40 per diluted share comprised of $0.35 per diluted share in Adjusted Net Income and $0.05 per diluted share in tax benefit in the first quarter of 2018, compared to $17.9 million, or $0.30 per diluted share comprised of $0.22 per diluted share in Adjusted Net Income and $0.08 per diluted share in tax benefit, in the first quarter of 2017.

Adjusted EBITDA and Adjusted EBITDA margin were $39.8 million and 37.9%, respectively, for the first quarter of 2018, compared to $33.6 million and 33.4%, respectively, for the first quarter a year ago. Net income, Adjusted Net Income and Adjusted EBITDA increased due to higher revenue coupled with operational efficiencies, the successful integration of RS Investments and, specific to net income and Adjusted Net Income, a reduction in the tax rate and decreased interest expense during the quarter as a result of refinancing activities which were partially offset by one-time write-offs of debt issuance and debt discount costs.

· Revenue increased $4.3 million to $105.0 million, compared to $100.7 million for the first quarter of 2017, due to higher average AUM, partially offset by a decrease in the realized fee rate due to asset mix.

· Operating expenses decreased 4% to $77.7 million, compared to $81.1 million in the first quarter of 2017, primarily due to operational efficiencies and the successful integration of RS Investments.

Balance Sheet / Capital Management

Cash and cash equivalents were $12.3 million at March 31, 2018, compared to $12.9 million at December 31, 2017. During the quarter, t he Company concurrently executed a $166.5 million IPO and $360.0 million debt refinancing which provided the Company with a 7-year term loan facility and established a 5-year revolving credit facility with aggregate commitments of $50.0 million. The Company used the net IPO proceeds of $156.5 million, which included the net proceeds from the underwriters’ exercise of their option to purchase additional shares, and $20.2 million of cash on hand to pay debt down from $499.7 million at year end to $323.0 million at March 31, 2018, a 35% reduction during the quarter.

Subsequent to quarter-end, the Company paid down an additional $18.0 million of debt, bringing its term loan balance to $305.0 million at May 8, 2018. The Company also increased its revolving credit facility to $100.0 million.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 10:00 a.m. Eastern Time today, May 8, 2018, to discuss its financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (866) 465-5145. A recorded replay can be accessed through May 22, 2018 by dialing (855) 859-2056; passcode: 6887603.

A slide presentation relating to the first quarter 2018 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Events and Presentations page of the Company’s investor relations website at https://ir.vcm.com.

About Victory Capital

Victory Capital is an investment management firm operating a next-generation, integrated multi-boutique business model with $60.9 billion in assets under management as of March 31, 2018.

Victory Capital’s differentiated model is comprised of nine Investment Franchises, each with an independent culture and investment approach. Additionally, the Company offers a rules-based Solutions Platform, featuring the VictoryShares ETF brand, as well as custom and multi-asset class solutions. The Company’s Investment Franchises and Solutions Platform are supported by a centralized distribution, marketing and operational environment, in which the investment professionals can focus on the pursuit of investment excellence.

Victory Capital provides institutions, financial advisors and retirement platforms with a variety of asset classes and investment vehicles, including separately managed accounts, collective trusts, mutual funds, ETFs and UMA/SMA vehicles.

For more information, please visit www.vcm.com.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “assume,” “budget,” “continue,” “estimate,” “future,” “objective,” “outlook,” “plan,” “potential,” “predict,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Victory Capital’s control, as discussed in Victory Capital’s filings with the SEC, that could cause Victory Capital’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements.

Although it is not possible to identify all such risks and factors, they include, among others, the following: reductions in AUM based on investment performance, client withdrawals, difficult market conditions and other factors; the nature of the Company’s contracts and investment advisory agreements; the Company’s ability to maintain historical returns and sustain its historical growth; the Company’s dependence on third parties to market its strategies and provide products or services for the operation of its business; the Company’s ability to retain key investment professionals or members of its senior management team; the Company’s reliance on the technology systems supporting its operations; the Company’s ability to successfully acquire and integrate new companies; the concentration of the Company’s investments in long-only small- and mid-cap equity and U.S. clients; risks and uncertainties associated with non-U.S. investments; the Company’s efforts to establish and

develop new teams and strategies; the ability of the Company’s investment teams to identify appropriate investment opportunities; the Company’s ability to limit employee misconduct; the Company’s ability to meet the guidelines set by its clients; the Company’s exposure to potential litigation (including administrative or tax proceedings) or regulatory actions; the Company’s ability to implement effective information and cyber security policies, procedures and capabilities; the Company’s substantial indebtedness; the potential impairment of the Company’s goodwill and intangible assets; disruption to the operations of third parties whose functions are integral to the Company’s ETF platform; the Company’s determination that Victory Capital is not required to register as an “investment company” under the 1940 Act; the fluctuation of the Company’s expenses; the Company’s ability to respond to recent trends in the investment management industry; the level of regulation on investment management firms and the Company’s ability to respond to regulatory developments; the competitiveness of the investment management industry; the dual class structure of the Company’s common stock; the level of control over the Company retained by Crestview GP; the Company’s status as an emerging growth company and a controlled company; and other risks and factors listed under “Risk Factors” and elsewhere in the Company’s filings with the SEC.

Such forward-looking statements are based on numerous assumptions regarding Victory Capital’s present and future business strategies and the environment in which it will operate in the future. Any forward-looking statement made in this press release speaks only as of the date hereof. Except as required by law, Victory Capital assumes no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

INVESTOR RELATIONS WEBSITE

Victory Capital may use the Investor Relations section of its website, https://ir.vcm.com, to disclose material information to investors and the marketplace as a means of disclosing material, non-public information and for complying with disclosure obligations under Regulation Fair Disclosure (“Reg FD”). Victory Capital encourages investors, the media and other interested parties to visit its investor relations website regularly.

Contacts

Investors:

Lauren Crawford, 310-622-8239

lcrawford@finprofiles.com

Media:
Tricia Ross, 310-622-8226

tross@finprofiles.com

Victory Capital Holdings, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(unaudited; in thousands except shares)

	For the Three Months Ended
	March 31,			December 31,			March 31,
	2018			2017			2017
Revenue
Investment management fees	$	89,130		$	89,206		$	84,115
Fund administration and distribution fees	15,834			16,440			16,546
Total revenue	104,964			105,646			100,661

Expenses
Personnel compensation and benefits	36,803			37,339			35,650
Distribution and other asset-based expenses	25,161			25,213			26,881
General and administrative	9,056			7,947			8,921
Depreciation and amortization	6,412			6,570			8,154
Change in value of consideration payable for acquisition of business	—			(269		)	—
Acquisition-related costs	—			659			363
Restructuring and integration costs	264			1,261			1,130
Total operating expenses	77,696			78,720			81,099

Income from operations	27,268			26,926			19,562
Operating margin	26.0		%	25.5		%	19.4		%

Other income (expense)
Interest income and other income/(expense)	(37		)	(2,097		)	345
Interest expense and other financing costs	(7,092		)	(10,308		)	(12,628		)
Loss on debt extinguishment	(6,058		)	—			—
Total other income (expense), net	(13,187		)	(12,405		)	(12,283		)
Income before income taxes	14,081			14,521			7,279

Income tax expense	(3,557		)	(3,312		)	(2,866		)
Net income	$	10,524		$	11,209		$	4,413
Earnings per share - basic	$	0.17		$	0.20		$	0.08
Earnings per share - diluted	0.16			0.19			0.08
Weighted average shares outstanding - basic	61,599,057			55,119,711			54,813,823
Weighted average shares outstanding - diluted	66,283,621			59,768,134			58,746,227
Dividends declared per share	$	—		$	0.23		$	2.19

Victory Capital Holdings, Inc. and Subsidiaries

Reconcilation of GAAP to Non-GAAP Measures

(unaudited; in thousands except shares)

	For the Three Months Ended
	March 31,			December 31,			March 31,
	2018			2017			2017
Net income	$	10,524		$	11,209		$	4,413
GAAP income tax expense	(3,557		)	(3,312		)	(2,866		)
Income before taxes	$	14,081		$	14,521		$	7,279
Interest expense	8,094			9,328			11,596
Depreciation	736			895			915
Other business taxes	375			428			450
GAAP amortization of acquisition-related intangibles	5,676			5,676			7,238
Stock-based compensation	3,322			1,740			2,301
Acquisition, restructuring and exit costs	518			6,001			2,603
Debt issuance costs	6,702			788			914
Pre-IPO governance expenses	141			347			288
Earnings/losses from equity method investments	137			319			—
Adjusted EBITDA	$	39,782		$	40,043		$	33,584
Adjusted EBITDA margin	37.9		%	37.9		%	33.4		%

Net income	$	10,524		$	11,209		$	4,413
Adjustment to reflect the operating performance of the Company
Other business taxes	375			428			450
GAAP amortization of acquisition-related intangibles	5,676			5,676			7,238
Stock-based compensation	3,322			1,740			2,301
Acquisition, restructuring and exit costs	518			6,001			2,603
Debt issuance costs	6,702			788			914
Pre-IPO governance expenses	141			347			288
Tax effect of above adjustments	(4,183		)	(5,692		)	(5,242		)
Remeasurement of net deferred taxes	—			(2,422		)	—
Adjusted net income	$	23,075		$	18,075		$	12,965
Adjusted net income per diluted share	$	0.35		$	0.30		$	0.22

Tax benefit of goodwill and acquired intangibles	$	3,320		$	4,998		$	4,891
Tax benefit of goodwill and acquired intangibles per diluted share	$	0.05		$	0.09		$	0.08

Adjusted net income with tax benefit	$	26,395		$	23,073		$	17,856
Adjusted net income with tax benefit per diluted share	$	0.40		$	0.39		$	0.30

Victory Capital Holdings, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except for shares)

	March 31, 2018			December 31, 2017
ASSETS
Cash and cash equivalents	$	12,296		$	12,921
Receivables	54,763			55,917
Prepaid expenses	4,102			5,441
Investments	12,243			11,336
Property and equipment, net	8,776			8,844
Goodwill	284,108			284,108
Other intangible assets, net	402,325			408,000
Other assets	6,532			6,055
Total assets	$	785,145		$	792,622

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	25,396		$	21,996
Accrued compensation and benefits	21,031			29,305
Consideration payable for acquisition of business	9,997			9,856
Deferred tax liability, net	5,582			4,068
Other liabilities	13,878			12,989
Long-term debt(1)	310,435			483,225
Total liabilities	386,319			561,439

Stockholders’ equity:
Common stock, $0.01 par value per share: 2018 - no shares authorized, issued and outstanding; 2017 - 78,837,300 shares authorized, 57,182,730 issued and 55,118,673 shares outstanding	—			572
Class A common stock, $0.01 par value per share: 2018 - 400,000,000 shares authorized, 12,899,315 shares issued and outstanding; 2017 - no shares authorized, issued and outstanding	129			—
Class B common stock, $0.01 par value per share: 2018 - 200,000,000 shares authorized, 57,115,842 shares issued and 55,051,785 shares outstanding; 2017 - no shares authorized, issued and outstanding	571			—
Additional paid-in capital	591,038			435,334
Treasury stock, at cost: 2018 and 2017 - 2,064,057 shares	(20,899		)	(20,899		)
Accumulated other comprehensive loss	98			64
Retained deficit	(172,111		)	(183,888		)
Total stockholders’ equity	398,826			231,183
Total liabilities and stockholders’ equity	$	785,145		$	792,622

(1) Balance at March 31, 2018 is shown net of unamortized loan discount and debt issuance costs in the amount of $12.6 million. The gross amount of the debt outstanding was $323.0 million.

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management

(unaudited; in millions)

	For the Three Months Ended									% Change from
	March 31,			December 31,			March 31,			December 31,		March 31,
	2018			2017			2017			2017		2017
Beginning assets under management	$	61,771		$	58,997		$	54,965		5	%	12	%
Gross client cash inflows	3,685			4,371			4,725			-16	%	-22	%
Gross client cash outflows	(4,318		)	(4,077		)	(5,111		)	6	%	-16	%
Net client cash flows	(633		)	294			(386		)	N/M		64	%
Market appreciation (depreciation)	(275		)	2,575			2,042			N/M		N/M
Net transfers	(8		)	(95		)	—			-92	%	N/M
Ending assets under management	60,855			61,771			56,622			-1	%	7	%
Average assets under management	62,020			60,354			56,277			3	%	10	%
Net client cash flows excluding Diversified Equity	(633		)	294			(54		)	N/M		1072	%

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management by Asset Class

(unaudited; in millions)

	By Asset Class
For the Three Months Ended	U.S. Mid Cap Equity			U.S. Small Cap Equity			Fixed Income			U.S. Large Cap Equity			Global / Non-U.S. Equity			Solutions			Commodity			Other			Total
March 31, 2018
Beginning assets under management	$	25,185		$	15,308		$	7,551		$	4,789		$	4,105		$	3,028		$	1,419		$	386		$	61,771
Gross client cash inflows	1,203			776			394			55			443			606			127			81			3,685
Gross client cash outflows	(2,080		)	(922		)	(640		)	(211		)	(220		)	(77		)	(146		)	(22		)	(4,318		)
Net client cash flows	(877		)	(146		)	(246		)	(156		)	223			529			(19		)	59			(633		)
Market appreciation (depreciation)	(103		)	(67		)	6			3			14			(34		)	(102		)	8			(275		)
Net transfers	—			—			—			(1		)	(8		)	40			—			(39		)	(8		)
Ending assets under management	24,205			15,095			7,311			4,635			4,334			3,563			1,298			414			60,855

December 31, 2017
Beginning assets under management	$	23,389		$	14,833		$	7,777		$	4,806		$	3,735		$	2,591		$	1,517		$	349		$	58,997
Gross client cash inflows	2,335			716			403			57			366			377			71			46			4,371
Gross client cash outflows	(1,819		)	(873		)	(654		)	(282		)	(211		)	(62		)	(154		)	(22		)	(4,077		)
Net client cash flows	515			(158		)	(251		)	(225		)	155			315			(83		)	24			294
Market appreciation (depreciation)	1,281			633			68			210			232			150			(16		)	18			2,575
Net transfers	0			0			(43		)	(1		)	(18		)	(28		)	0			(5		)	(95		)
Ending assets under management	25,185			15,308			7,551			4,789			4,105			3,028			1,419			386			61,771

March 31, 2017
Beginning assets under management	$	20,083		$	14,090		$	7,726		$	5,921		$	3,460		$	1,602		$	1,882		$	202		$	54,965
Gross client cash inflows	2,209			1,249			503			68			208			347			108			33			4,725
Gross client cash outflows	(1,873		)	(1,201		)	(588		)	(711		)	(472		)	(47		)	(205		)	(14		)	(5,111		)
Net client cash flows	336			48			(85		)	(643		)	(264		)	300			(97		)	19			(386		)
Market appreciation (depreciation)	1,135			418			117			7			286			68			(15		)	26			2,042
Net transfers	$	1					$	(2	)	$	—		$	—		$	—		$	—		$	1		—
Ending assets under management	21,555			14,556			7,756			5,285			3,482			1,970			1,770			248			56,622

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management by Vehicle

(unaudited; in millions)

	By Vehicle
For the Three Months Ended	Mutual Funds(1)			ETFs			Separate Accounts and Other Vehicles(2)			Total
March 31, 2018
Beginning assets under management	$	37,967		$	2,250		$	21,555		$	61,771
Gross client cash inflows	2,626			481			578			3,685
Gross client cash outflows	(3,266		)	(29		)	(1,023		)	(4,318		)
Net client cash flows	(640		)	452			(445		)	(633		)
Market appreciation (depreciation)	(307		)	(28		)	60			(275		)
Net transfers	(31		)	—			22			(8		)
Ending assets under management	$	36,989		$	2,674		$	21,192		$	60,855

December 31, 2017
Beginning assets under management	$	37,341		$	1,875		$	19,782		$	58,997
Gross client cash inflows	2,264			278			1,829			4,371
Gross client cash outflows	(3,121		)	(16		)	(941		)	(4,077		)
Net client cash flows	(857		)	262			889			294
Market appreciation (depreciation)	1,577			113			886			2,575
Net transfers	(93		)	—			(2		)	(95		)
Ending assets under management	$	37,967		$	2,250		$	21,555		$	61,771

March 31, 2017
Beginning assets under management	$	33,975		$	906		$	20,085		$	54,965
Gross client cash inflows	3,945			317			463			4,725
Gross client cash outflows	(3,635		)	(2		)	(1,474		)	(5,111		)
Net client cash flows	310			315			(1,011		)	(386		)
Market appreciation (depreciation)	1,360			46			636			2,042
Net transfers	(5		)	—			5			—
Ending assets under management	$	35,640		$	1,267		$	19,715		$	56,622

(1) Includes institutional and retail share classes and VIP funds.

(2) Includes collective trust funds, wrap program separate accounts and unified managed accounts or UMAs.

Information Regarding Non-GAAP Financial Measures

Victory Capital uses non-GAAP financial measures referred to as Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the business. These measures eliminate the impact of one-time acquisition, restructuring and integration costs and demonstrate the ongoing operating earnings metrics of the business. The Company has included these non-GAAP measures to provide investors with the same financial metrics used by management to assess the operating performance of the Company.

Adjusted EBITDA

Adjustments made to GAAP net income to calculate Adjusted EBITDA are:

· Adding back GAAP income tax;

· Adding back interest paid on debt and other financing costs net of interest income;

· Adding back depreciation on property and equipment;

· Adding back other business taxes;

· Adding back GAAP amortization of acquisition-related intangibles;

· Adding back the expense associated with stock-based compensation associated with equity issued from pools that were created in connection with the management-led buyout with Crestview GP from KeyCorp, the Munder Acquisition and the RS Acquisition and as a result of any equity grants related to the IPO;

· Adding back direct incremental costs of acquisitions and the IPO, including expenses associated with third-party advisors, proxy solicitations of mutual fund shareholders for transaction consents, vendor contract early termination costs, impairment of receivables recorded in connection with an acquisition and severance, retention and transaction incentive compensation;

· Adding back debt issuance costs;

· Adding back pre-IPO governance expenses paid to the Company’s private equity partners that terminated as of the completion of the IPO; and

· Adjusting for earnings/losses on equity method investments.

Adjusted Net Income

Adjustments made to GAAP net income to calculate Adjusted Net Income are:

· Adding back other business taxes;

· Adding back GAAP amortization of acquisition-related intangibles;

· Adding back debt issuance costs;

· Adding back pre-IPO governance expenses paid to the Company’s private equity partners that terminated as of the completion of the IPO;

· Subtracting an estimate of income tax expense on the adjustments; and

· Subtracting the impact of remeasuring the U.S. net deferred taxes under the Tax Act.

Tax Benefit of Goodwill and Acquired Intangibles

Due to Victory Capital’s acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide it with additional significant supplemental economic benefit. The tax benefit of goodwill and intangibles represents the tax benefits associated with deductions allowed for intangibles and goodwill generated from prior acquisitions in which the Company received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangibles with a step-up in tax basis.